All Forum Posts by: Aaron Xie

Originally posted by @Daniel Chang:

Aaron,

Are you cash rich or looking somewhere to park your cash?  I don't know the lending terms up in Canada where you are from.  You are likely not going to be able to get a loan on a 5 cap purchase.  Even if you do, your spread would be extremely thin.  

 @Daniel Chang, thanks for the input. 

(1) I also plan to purchase a warehouse in great LA area. So at the end, I will not have much cash left in hand ($400k?) 

(2) Are you sure I can not get loan for purchase with 5% cap? My agent did not mention this to me, so I thought this was not an issue...

My calculation shows that I would have negative ROI if I were to sell in the first two years (-14% and -3% respectively). I think that's due to the assumption of the low annual price increase (only 1%) and the large agent commission fee (6% of sale price) ....

Thanks for all the inputs, guys. I really appreciate it.

Actually, I am looking at NNN in California and Nevada. Sorry about the confusion.

Ok, here is the detailed information and my calculation, which shows a 7% annual ROI by 2023 when the current lease ends. This does not sound like a sweet deal to me. Did I miss anything in my calculation?

Sale price: $4,595,000

Initial cash input:

Down payment: 25%, $1,148,750

Appraisal fee: $2,000

Title insurance: $3,000

Lawyer fee: $2,000

Inspection fee: $650

Total initial cash input: $1,156,400

Holding cost:

Initial principal: $3,446,250

Interest rate: 4.5% and fixed for 25 years

Amortization: 25 years

Yearly mortgage payment: $229,864.52

Property tax: $0 (paid by tenant)

Property insurance: $0 (paid by tenant)

Building maintenance: $0 (paid by tenant)

Yearly income: $229,932 with 1.5% annual increase

Yearly property price increase: 1%

Selling price at end of term (Year 2023): $4,926,461.94

Selling cost:

Agent commission (6%): $295,588

Legal fee: $400

Cash in hand if sold at end of the term (Year 2023): $1,872,938

Total ROI in 7 years: 62% = $1,872,938/$1,156,400-1

Annual ROI: 7.13%

I have been reading posts about NNN, but never see any discussion on pros and cons of buying NNN properties that are leased to commercial banks.

Right now I am looking at a commercial property rented to a big commercial bank, already 3 years into a 10 year lease term. Cap rate is 5% right now, with a 1.5% yearly increase in rental. Let me know if any additional information is needed. And thanks for any thought or experience sharing.  

I have to reply this one to bookmark it.

Great post and useful info.

My company is looking for a 5000-8000 sqft warehouse in either City of Industry or Ontario, for purchase or for lease. We prefer units on the street front and with a loading dock. Any recommendation on a commercial real estate or if you know such a warehouse, please let me know. I will be in the great LA area for one to two weeks so any references or info will be appreciated. Plz send me a private message. Sorry phone number or email is not allowed in the post.

Any recommendations will be appreciated.

Hi, Just want to see if anyone is willing to share his/her experience of renting on AirBnB. What are the pros and cons, and what should the landlord pay attention to? And how is your ROI, compared to the long-term rental? I am very interested in learning all these :)

I am from Canada, but am thinking of buying more rental properties in Indy and surrounding areas. What are the financing options for investors from Canada? And any recommendation of local mortgage brokers/lenders that work with international buyers? Thanks.